A 2018 country analysis by Washington, D.C.-based think tank the Tax Foundation shows that corporate taxes have fallen by almost one-third globally in the past four decades, with Hungaryʼs 9% rate providing companies one of the most favorable business environments in the region.
The Tax Foundationʼs research reveals that the global average corporate tax rate fell from 38.8% in 1980 to 26.5% in 2018. In Europe, the average was 25.4%, almost three times as high as the Hungarian rate, according to a press release sent to the Budapest Business Journal.
The 9% rate in Hungary was introduced in 2017, representing the lowest corporate tax rate across the entire EU. The only country on the entire continent with similarly low corporate tax is Montenegro (also 9%).
"One of the decisive intentions behind the decreasing trend of general corporate tax rates, observed in Hungary as well, is the strengthening of competitiveness and the capital attraction capability of states," says Botond Rencz, country managing partner at professional services firm EY Hungary.
"Due to the development of technology, as well as globalization and geopolitical changes, investors became more flexible," Rencz adds. "The level of corporate tax in the given country is a high-priority aspect in the case of developments. This is partially confirmed by KSH [Central Statistical Office] data showing that the volume of investment in the national economy was up 17%, growing to the highest level recorded."